Myth Busted: Why Small Banks Are Now Outperforming the Big 4 (And What OJK Has Planned Next)

TL;DR: The “buy Big 4 banks first” strategy is failing in 2026. Small/Mid banks are up +26-30% while Big 4 are down -10%. The catalyst? OJK is rumored to be planning to erase the KBMI 1 classification, forcing massive M&A/consolidation. BJTM is the blueprint; BBYB and BANK might be the targets.

For years, the “conventional wisdom” in IHSG has been simple: Wait for the Big-4 banks to move first, then the small banks will follow.

But a new analysis from AgloResearch suggests otherwise.

1. The Myth vs. Reality

There is an old belief in the IHSG community: “Wait for the Big-4 banks (BBCA, BBRI, BMRI, BBNI) to move first, then the small banks will follow.”That wisdom is officially wrong.Throughout the past year, retail “smart money” has flipped the script. While foreign funds have been selling the big caps, the smaller tiers are flying on improved fundamentals.

Lets look at the Scorecard (Past Year):

Mid-Cap Banks: 🟢 +30% (YTD: +5%)
Small-Cap Banks: 🟢 +26% (YTD: +10%)
Big-4 Banks: 🔴 -10% (YTD: +3%)

(Source: Algo Research Estimates)

2. The Big Catalyst: OJK & The Death of KBMI

The real story isn’t just earnings—it’s regulation. Reports suggest OJK is planning to erase the KBMI 1 classification (banks with Core Capital under IDR 6 Trillion) to force consolidation.

If you are a bank in KBMI 1, you have two choices: Raise money (Rights Issue) or Get acquired (M&A).

Current KBMI Structure & Risk Levels:

3. The Blueprint: Bank Jatim (BJTM) & The “KUB” Scheme

Bank Jatim (BJTM) has used the KUB (Kelompok Usaha Bank) scheme to become a parent for 5 regional banks (NTB Syariah, Lampung, NTT, Sultra, Banten).

Why it matters:BJTM only bought minority stakes (spending ~IDR 400bn) but got controlling power. We are already seeing what successful consolidation looks like.

Result: Consolidated loan growth hit +29% YoY vs just 9.6% standalone.It is a cheap way to grow earnings without burning massive capital.

4. Who is Next?

If KBMI 1 is erased, digital banks and small conventional banks owned by conglomerates might finally throw in the towel and sell.

The Watchlist:Bank Neo Commerce (BBYB) & Bank Aladin (BANK)

The Problem: Both are profitable in 2025 (barely), but their Core Capital is only IDR 3.2T – 3.9T. They are miles away from the IDR 6T safety zone.

The Play: Organic growth will take 4-5 years to hit that capital target. It makes more sense for their backers (Akulaku/conglomerates) to divest/merge rather than inject another ~3 Trillion.Bank Bumi Arta (BNBA) & Bank Ganesha (BGTG)Classic acquisition targets for larger banks needing a license.

Summary

The rotation is real. If you are still waiting for the Big 4 to bottom out, you might miss the M&A super-cycle happening in the small caps.